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Did Export Diversification Soften the Impact of the Global Financial Crisis?, Rafael Romeu, Nelson Costa Neto

This study considers the role of export diversification in determining trade outcomes during the global financial crisis. The impact of export diversification (or concentration) is measured by assessing three different dimensions of specialization. First, concentration by geographic destination is considered; that is, whether the bulk of exports from a country go to many or few trading partners. Second, industry/sectoral concentration is considered; that is, whether a country’s exports are scattered across many industries and sectors, or concentrated in just a few. Third, product concentration is considered; that is, whether countries produce many products within their export sectors or just a few. The workhorse gravity trade model is adapted with trade diversification as an additional trade cost, and the model solution is empirically tested on a dataset containing over 500 thousand observations for Latin America. Industry and product concentration are found to significantly affect the resilience of Latin American countries’ trade during the global financial crisis - increasing the diversity of both export sectors and export products within sectors by one standard deviation reduces the quarterly decline in exports by approximately 4.7 percent. Diversifying exports across many different trading partners is not found to significantly affect outcomes
Table Of Contents
Cover Page; Title Page; Copyright Page; Contents; I. Introduction; II. Trade Concentration as an additional trade cost; III. Summary Statistics and Estimation; A. Data Description; B. Trade Collapse and Summary Statistics; 1. Herfindahl Indices and Trade Collapse by Country; 1. Product Diversification and Trade Collapse in Latin America; 2. Trading Partner Diversification and Trade Collapse in Latin America; 3. Trade Collapse and Intra-Industry Trade Concentration; C. Results; 2. Estimates of Bilateral Trade on Trade Concentration
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (38 p.)
Specific Material Designation
Form Of Item

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